64% LTV ..fixed rate or tracker?

Estelle22

I am not very good at this and admit that finding the right mortgage deal is as much fun as being stuck in Hampton Court Maze

I have 64% LTV and am trying to decide between the First Direct Tracker Mortgage which is BOE + 2.49% for the term and make overpayments or the HSBC 2 year fixed special at 2.99% for 2 years this has a booking fee of £999.


Please can someone also explain how the booking fee works and what I should be looking for .

By the way I am getting a Mortgage Broker to look at this for me but I dont want to miss out on any of the direct deals that they do not see and would like some impartial advice



Many Thanks

_Andy_

The broker won't be able to source either of the ones you mention.
Personally I wouldn't bother paying £1000 for just a two year fixed rate.
AFAIK the fee is paid upfront with HSBC.

Peelerfart

It would be helpful if you could post how much the mortgage is for.

PF

Estelle22

PF
The Mortgage is for £80,000 I have a £45,000 deposit and £3K saved for survey fees etc

mclaren32

Also worth considering what proportion the mortgage repayment is of your net monthly income and how well you can deal with payments going up.

property.advert

The fee for the mortgage is the equivalent of another 16k on the 80k mortgage you want and thus too high for you to realistically consider. Were your mortgage 500k, then the 1k fee is immaterial.

Simply, you pay 2.99% on 80k for 24 months = 199*24=4784 or you pay 199*24=4784+999=5783 = 21% more than the 2.49 rate (if that has no fee).

It is a no brainer for your small mortgage.

Or you could pay 2.49% (BOE+1.99% on 60% or 65% LTV) on 80k for 24 months = 166*24=3984 or you pay 199*24=4784+999=5783 = 45% more than the 2.49 rate (if that has no fee).

Hopejack

We've just secured a mortgage on the HSBC rate you mention with a low ltv ratio mortgage. I appreciate what others are saying on here but I like the idea of a fixed rate even if it is only for 2 years. Who knows what the BOE base is going to do after the election, no-one sees it rocketing but it can only go up at some point! I don't like too much risk so it's a fixed for me.

We chose a low interest rate (2.99%) deal as we need to get a fair bit of work done to the house in the first year or so, so choosing a lower rate meant we can afford to do the work. We will reconsider going to a slightly higher rate but for a longer fix after the initial two years once we have the bulk of the 'renovation' costs out of the way. I agree that £999 application fee is steep but it's not that bad when you consider the average is around £500 - I saw one deal of 2.99% fixed with a £2k plus arrangement fee! One watch out is you pay the fee up front as soon as you apply for the mortgage (can't be added to the mortgage) - they obviously say whether they'll lend to you first etc - it's just to 'book the funds' at that rate.

I suppose it depends on your attitude to risk. Your tracker could go up in the next year or so certainly above the 2.99% with the HSBC.

As someone else said on here, I don't think intermediaries deal with HSBC - you can only go direct for their rates.

property.advert

Nothing wrong with 2.99 fixed at all but there is if you only want a tiddly little mortgage and the fee is £999 as it makes the real rate you are paying much more than 2.99%

On 80k, when you include the £999 fee, the real rate is 3.62% over 2 years.

Estelle22

thanks so much for your replies.. Okay so it makes sense to me now not to pay a large arrangement fee and fix for only two years for the amount of mortgage I need but what if I was to fix for say 5 years and not pay an arrangement fee. I have seen two ...
Brittania fixed with no arrangement fee 4.79% or Co-op 4.49 no arrangement fee.
Monthly payments work out to be about £440 which means I can comfortably afford to overpay by approx £200 per month
Would your advice be to still consider a tracker?

dimbo61

Now both the 5 year deals make much more sence and if you can overpay by £200 a month and have an £80K mortgage then you would have a large part of the mortgage cleared before you need to look for the next deal!
Long term security

property.advert

Estelle, don't you get it ? The rate to get is the lowest and use the rest to overpay. Paying daft high rates for some future "security" is just that, daft.

You can pay £700 a month or so and you are considering paying £440 mortgage and a couple of hundred overpay when you should be paying only £166 interest and overpaying £500 a month. You benefit from lower interest from day one and then it reduces every month going forward. Even if rates rise, you are still ahead they'd have to rise to around 5% over 5 years to make your deal even look bad.

It is a no brainer. If you can use Excel, start plotting the figures to see for yourself.